Good morning, everyone. Welcome to meeting number 20 of the Standing Committee on Transport, Infrastructure and Communities. Orders of the day are, pursuant to Standing Order 108(2), a study of the recall of vehicles manufactured by the Toyota Motor Corporation.
Joining us again today, from Toyota Canada Inc., is Mr. Stephen Beatty, managing director, and from Toyota Motor Corporation, Minoru Tanaka, general manager, underbody design division.
Just for the information of committee members, Mr. Tanaka has a translator and we will have a bit of a delay between question and response. I would ask that members, if they want to preserve the most time for their questions, keep their questions as short as possible for the second translation.
I understand, Mr. Beatty, that you have an opening comment. Then we'll move to questions and answers.
Thank you, Mr. Chairman.
Mr. Chairman, the committee has indicated that it wants to follow up on the matters that were discussed at the last hearing. You also requested the presence of someone with a technical understanding of the pedals used in Europe and Canada, For that reason, I'm joined here today by Mr. Minoru Tanaka.
Mr. Tanaka is a veteran body engineer who has been with Toyota since 1984. Since joining Toyota, he has focused his work on underbody design engineering, and currently he is general manager of the division that is responsible for design of these aspects of all Toyota, Scion, and Lexus models.
Also, since March 16, when we appeared before the committee, Toyota has made substantial progress towards completing the recalls that are the subject of your review. I'd like to take just a couple of minutes to update members on developments, and then Mr. Tanaka and I will answer any remaining questions you may have.
When Toyota was last here, I said that we were confident that a review of the facts in this case would bear out the conclusion that we had never put profit before the safety of our customers. We also confirmed that our customers, Parliament, and the general public could be assured that the remedies we offered were simple, robust, and above all, effective; in other words, that Toyota vehicles are both safe and long-lasting and that our customers can be confident that the company stands behind the product and supports their needs long after they've left the showroom.
Several questions arose at the last committee hearing, and Toyota was asked to respond to those questions and to provide certain information items. This was a substantial body of work, but I can report that we have collected, translated, and provided the responses back to the committee. That has taken time, but hopefully members of the committee have received copies of that material.
Toyota holds the safety of its customers paramount. We believe we've taken appropriate steps to ensure that issues arising in the Canadian marketplace are investigated, assessed, and fixed. These are complex issues, with which all manufacturers are challenged.
We believe our response to these issues is in keeping with the actions of other members of the industry; however, we're striving to be an industry leader in this regard. We've tried to go above and beyond to ensure that Canadians retain confidence in our brand. That trust, of course, is central to the health of our business.
As a result, we've taken steps to ensure that repairs are carried out quickly and efficiently, with the least inconvenience to our customers; that regular updates are provided to regulators, the media, and the public about the progress of campaigns and other information related to them; and we've established and enhanced quality and safety structure and process, with Canadian representation. Finally, we continue to meet and, more significantly, aim to exceed the requirements of the Motor Vehicle Safety Act in addressing other issues as they arise.
It's fair to say that differences in vehicle architecture, climatic or other environmental conditions, issues of maintenance or wear and tear, as well as various human factors, make it difficult to infer that an issue encountered in one part of the world will necessarily translate to vehicles operated in a different region. But as for Canada, we had no reports of sticking pedals until late last fall.
We moved quickly to address the issue, and in addition to issuing the recall, Toyota suspended production and delivery of vehicles until a remedy could be delivered to the marketplace. We then undertook the most comprehensive and rapid rollout of a recall campaign in our history, and today completion stands at over 88%. We're encouraged by this result and we're aiming for 100% completion.
Now, we understand that public expectations are growing, and as we noted in our last appearance before committee, Toyota has committed to the creation of a new safety and quality structure in North America, with a greater role in safety determinations. Since that time, a chief quality officer has been appointed, committees established, and an independent advisory panel--including a senior Canadian representative--appointed. Also, our individual corporate entities across North America are all looking at our internal procedures to find potential areas for improvement.
Mr. Chairman, Mr. Tanaka and I look forward to your questions.
I realize that you chose to consider this to be a driveability issue and, as you say, unrelated to safety, an assumption or a conclusion that was later changed.
But in testimony to the committee on the date that you mentioned, March 18, the deputy minister of transport addressed the issue of...you'll recall that I asked about safety-related defects and the lack of a clear definition. There currently isn't one under the act. But she made reference to judicial decisions, and she did refer in that context to the department's guidelines for enforcement and compliance policy for defects.
Let me just refresh your memory on some of that. The guidelines also state:
||A safety-related defect is generally one that is common to a group of vehicles...of the same design or manufacturer. These defects are likely to affect the safe operation of a vehicle...without providing any prior warning to the vehicle operator or user. Therefore, the defect poses a risk to the vehicle operator, occupants and others.
In its examples of safety-related defects, it clearly states, and I quote: “Accelerator controls that may break or stick”.
Mr. Beatty, could you explain how, based on these guidelines, you would not have issued a notice of defect? How could you justify that?
Thank you very much, Mr. Chairman.
Gentlemen, I wish to thank you for being here with us.
What I am obviously interested in is understanding the way in which all of this works. The law requires that you file a notice of defect. Indeed, as Mr. Volpe mentioned, when you become aware of a safety defect, you must give notice to Transport Canada. I know that there are timeframes.
My first question is for Mr. Tanaka.
Are you the person who receives the complaints or who supervises the assessments? What happens when a complaint is filed by Canada, the United States or a European country? Try and explain to me how this works.
We have put in place a new global quality and safety committee that is chaired by Mr. Akio Toyoda, the president of our company, and with that are regional safety and quality officers for each of the major areas of the world.
In North America, a chief quality officer has now been appointed. There are working committees that support him and Canadians are included on those committees. There is also an independent advisory committee with noted outside experts, including Roger Martin, a representative from Canada.
As for our vision of this, it of course takes a certain amount of time for technical investigation and determination to be made, but we want to ensure at all times that, if there is any lack of clarity, or a sense that there is a lack of speed in dealing with issues, or a lack of concern, we have people from the region who are represented within that decision-making structure and are able to help influence the outcome. That's a new program.
Even from the standpoint of an automotive distributor supporting our dealer network, obviously those technologies change all the time, and we have to regularly retrain our personnel to be able to support those vehicles. That said, one of the things that is happening is that, given the rise of electronics in vehicles, many of the systems are actually easier to check with various available tools.
As the nature of those systems and the technical challenges change, so too does the standard knowledge, and some of the old issues tend to go away. For example, I think the last time I was here I mentioned that in the past one of the things that was common across the auto industry was to experience binding of throttle cables. Because those cables don't exist anymore, that's an issue that has gone away as we've moved to new technology.
I think everyone in the industry is learning and changing their skill sets and the tools that we use to look at it. I've heard the department say they're of the view that they have the resources necessary for the job. Clearly, if the job changes, that's a separate question.
Good morning. Welcome back to our committee. Thank you for being here.
First of all, I'd like to thank you for the considerable amount of material you have provided the committee. It has made for a lot of reading, but thank you very much.
Mr. Beatty, I think what's apparent here is that our committee really is trying to figure out who knew what, when, where, and why, and, on a go-forward basis, how we resolve this. I'll get to that last question at the end.
In some of the documentation you have provided to us, there were questions asked previously about isolated reports of incidents; you say in the U.S. in July 2006, and in Estonia in August 2007. You said in response to another question that Toyota had identified 39 reports related to the sticky pedal phenomenon that were issued in Europe.
You've described the organizational structure in Canada. Can you tell us about the organizational structure in Europe? Is there any communication between the two? Would they share any of that information?
I'm not intimately familiar with Europe; obviously, that's not part of my day-to-day role. But I can say in general that the organization in Europe is that you have many distributors operating at the local level on a national basis across Europe. There is a regional organization called Toyota Motor Europe that is responsible for the activities within the region. Then, like Canada, technical matters would go back to CQE in Japan for ultimate investigation and review.
As we talk about that type of engineering, engineering happens at various different points, obviously, and first in the design of the vehicle. In other words, have we considered the issues, and if we design to a specific performance parameter, then how does the vehicle perform in operation in the field? Also, there are the quality checks that you do at manufacturing. There are a number of different points where you intervene to deal with those issues.
But in general, the same process would apply in Europe as it does in Canada, which is that it starts with a vehicle identified at the dealership and escalates as the various parties are either able to resolve it or are looking for additional technical support.
Thank you, Mr. Chairman.
I want to pick up where I left off, Mr. Beatty. I'm a little disturbed by some of the things you've said to my other colleagues as we've been going along, because it strikes me that you have been making some qualitative decisions, as you've been going along, about the material that's come to you.
You've made a decision about whether some things are routine or maintenance issues, and you knew what was going on. In fact, when I spoke to you a moment or two ago, I asked you, when those reports regarding the sticky pedals and the composition of the products that went to PPS, did you advise Transport Canada? You didn't get a chance to answer, so I'm going to ask you again. Did you advise Transport Canada of the notice of defect?
Yes, I appreciate that. You put that in your letter--again, the letter of February 19--and it strikes me that you're trying to cover your tracks. Because on January 21, you issued that notice of defect to Transport Canada dealing with the pedals, both the PA46 and PPS materials. Oddly—and this is what is disturbing—in committee testimony on March 16, you stated, and I quote you, “Our first case of a sticky pedal was in late October”. That was 2009. You said, “At the time we didn't know what it was”.
You can imagine.... I would be shocked that you would say that you “didn't know what it was”. So for three years, according to your letter, Toyota is dealing with this issue and you “didn't know what it was”, but you also indicated in the testimony that it was your responsibility—yours—to issue a recall notice the moment you became aware of a defect.
Now, Mr. Beatty, I don't understand. It would have taken you three years when at the beginning of my questioning I asked you whether you were aware of section 10 of the Motor Vehicle Safety Act, which holds the “company that manufactures, sells or imports any vehicle” and so on, responsible...? Why would it have taken you three years?
No, really, with respect, Mr. Beatty, it talks about when you become aware, when the company becomes aware.
So there are two issues, to put that back to you. It's, one, whether you're complying with the guidelines and the act as per Transport Canada's observance of the act, so it's a question of leadership, whether Transport Canada's or yours; or it's the other, which is whether Toyota, essentially, the one that's responsible for the engineering and the design, is giving you the information about the vehicles you're selling on the North American market.
That's what it's about and you're telling me no on both accounts, that, you know, you became aware of it on January 20 because January 21 is when you issued the recall.
You now have additional information to consider. But you have to recognize that this is after the fact, after a problem arose. The complaint of many of our constituents is that we deal with problems only after they have occurred. Having reviewed the issue, have you come up with any recommendations or suggestions to improve your procedures, in order to prevent such a situation from happening again?
We're talking a lot about Toyota Corporation at the present time, but in a globalized world, we obviously have to deal with many businesses that have their headquarters abroad. What is important to us is to have a government which, through its department, will adequately ensure the safety of its citizens.
Have you reached any conclusions about ways to improve your operations that you will be recommending?
I would point out, Mr. Chair, that currently we do react to any complaints we receive from the Canadian public. As we testified earlier to the committee, we receive about 1,200 complaints a year with respect to motor vehicle issues, and we investigate each of those complaints.
Certainly, the more information you have, the better determination you can make. It's a question of capability. If we were to go to a system in which all complaints had to be reported to Transport Canada, that would obviously increase greatly the number of issues we would have to deal with, and there would be a resource consideration as to how to deal with that information.
I would note that in the United States, they do have a system in which all of these complaints must be brought forward. In this particular instance, it seems that NHTSA was no better at determining this particular problem than we were.
I thank our witnesses for returning to committee.
Of course, you were here a few months ago, and at that time, we were able to establish that Toyota knew about its problem in Canada with the CTS gas pedal before it issued a recall. Transport Canada officials are now investigating a possible violation of the Motor Vehicle Safety Act.
Mr. Beatty, I was sort of taken by your response to a question from Mr. Laframboise. You said that it depends on what the definition of a complaint is. I don't know about you, but I was reminded of former President Clinton when they got to the most incriminating question, and he said that it all depended on what the definition of “is” was.
I'm not taking a lot of comfort here. There's a bit of hairsplitting going on. I think what I see in the e-mails that have been provided to us is a pattern of doing the minimum with respect to safety recalls.
On the Prius braking system problem, in an e-mail on February 4, 2010, you asked what Transport Canada's expectation of Toyota Canada was, as if the issuance of a recall relies on Transport Canada rather than on Toyota Canada.
In the 2009 Matrix, there was a rear-seat cushion problem. Transport Canada officials raised the question of whether it had an impact on child safety seats. You asked whether that wasn't a quality issue rather than a safety issue.
In an e-mail on November 27, 2009 from someone at Toyota—I don't know who, as you guys blocked out who was responsible for sending these—you actually stated that you wanted a Transport Canada investigation on the 2009 Venza issue not conducted at a dealership, but at your head office, given the high profile of this investigation. Maybe it all depends on what the definition of “safety” is at Toyota. I'm a little concerned.
Let me ask a question of you on technical service bulletins and dealer service bulletins. You raised that issue. What is the difference between issuing a technical service bulletin versus issuing a notice of defect for recall? What determination does Toyota make in the difference between those two? It really does depend on what the definition of safety is. Mr. Beatty, what's the difference?
Thank you, Mr. Chairman.
Mr. Beatty, in sworn testimony before this committee on March 16, 2010, Mr. Ray Tanguay, president of Toyota Motor Manufacturing Canada Inc., stated that prior to issuing the recall on the defective accelerator pedals on January 21, 2010, Toyota was working with the pedal manufacturer, CTS, to redesign that pedal.
Do you recall that statement?
Thank you, witnesses, for coming here today and providing follow-up information.
Obviously there is a lot of information: I received three CDs in my office yesterday. It took 20 minutes to open the CDs just to get at the documents; there are some 58 documents, I understand, with 221 pages in total. Quite frankly, I will be reserving my opportunity to call you back as witnesses to answer questions from those documents.
Originally, I did receive a letter from Toyota Canada in relation to a request I made for pedals...in particular, at a committee meeting, I asked whether or not the defects that we're talking about in Canada--the pedal assembly and the material utilized--were the same as what was found to be defective in Europe. The answer to that in the first letter was a wiggle letter, quite frankly, as we call them in law; it didn't answer my question. I was very disappointed with that. I want to put on the record how disappointed I was with that answer by Toyota Canada.
Certainly, the response that I received just recently, on May 31, 2010, in a letter from Toyota Canada answering those questions in more detail, is quite frankly what I would have expected from a professional organization in the first place, and it indicated that in essence the material used in Canada resulting in the sticky pedal phenomenon was the same as that used in Ireland and the United Kingdom.
I understand that you have indicated you feel everything was done, in particular in relation to the notice period, but I would argue that point. I do not believe adequate notice was given for me personally. In this particular case, you had notice a year before. I'd like to talk about that first.
What recall mechanisms, professional notices, technical service bulletins, etc., would have changed hands among Toyota Europe, Toyota Canada, or Toyota United States? Because, in essence, Toyota International--I suppose I could utilize that--owns a percentage of everything; it in fact owns Toyota Europe and Toyota U.S. and owns 50% of Toyota Canada. So what was exchanged between Toyota Europe and Toyota Canada or other branches in Toyota? Because certainly, I would suggest, you should have notice of that.
I'd like to come back to this issue about responsibility, because it seems to me, Mr. Beatty, that Toyota Canada has shirked its responsibility of showing some leadership and providing a service to its consumers, as per Mr. Jean's example of his mom.
I'm wondering whether you have compromised the ability of Transport Canada to provide the regulatory responsibility as well. I'll ask Mr. McDonald that in a moment, too, but you came before this committee on the March 16, and in the process of explaining in your testimony the recall process, you took credit for, to use your words, providing a “unique Canadian safety recall on the all-weather floor mat in the newly introduced Toyota Venza”.
Do you recall when that recall was issued?
You indicated when you initiated this that you were taking this great responsibility, but e-mails that were provided to the committee--by the way, I share Mr. Jean's view that we didn't get all the information we asked for--showed that on October 2, the head of recalls at Transport Canada, Mr. Nigel Mortimer, wrote to Toyota expressing concern that the Venza model was not included in that September recall. That was October 2. He stated that Transport Canada had two cases involving the Venza, and he demanded that Toyota address these concerns immediately.
So here's what happened. You've documented everything in your letter.
On October 7, Toyota issued further recalls, but not for the Venza. Mr. Mortimer wrote to Toyota again and said, “We remain concerned with your current exclusion of the Venza and trust that this will be included in the near future”.
A month later, Transport Canada sent another letter to Toyota, again asking that the Venza be included in the recall. Five weeks later, after November, and in fact, on December 17, a full 11 weeks after being asked to address these concerns immediately, Toyota issued a recall. I'm just wondering if I should be left with the impression, or if the question is, that this is how Toyota always operates, even when under scrutiny.
Yes, I know, but that just isn't good enough. We read through those e-mails, some of the reports by your field investigators and Transport Canada's field investigators, and they dismissed that as just a lot of crock. That's all it is. In fact, some of those e-mails, if they're read out publicly, would embarrass anybody and would embarrass everybody.
But the issue is not so much that you had to wait for this or for that; it's that you took 11 weeks after Transport Canada, the regulator, demanded that you act—11 weeks. They had information and you wouldn't act on it.
It boggles the mind that Transport Canada didn't immediately act the way the minister said he would, i.e. launch investigations, yet you admit that you knew all of these things and you wouldn't do anything about it for 11 weeks. That's three months of people driving under dangerous conditions.
How can you look at yourself in the mirror and say it's okay for me to let people drive with a defective vehicle for three months while I make up my mind that this isn't a routine or maintenance procedure and that in fact it is a safety-related defect?
There he is, right there, Mr. McDonald from Transport Canada, who's telling you, “Wake up”.
So, Mr. McDonald, there has been a series of complaints in Canada, in the United States and in Europe. That makes it complex.
I always return to how we can ensure that this will not reoccur. As my colleague Mr. Carrier said earlier, we might have to rethink a number of things.
Presently, you receive complaints about manufacturing defects. The act compels manufacturers to give you notice of defects. You receive complaints from consumers but the majority are made to the dealers and the companies themselves. They are required, when they become aware of a defect, to notify you and to do a follow-up.
As we have seen, the gas pedal issue is complex. These are new technologies. If we were to decide that complaints must be transmitted to Transport Canada at the same time as they are received, say, at the headquarters of Toyota in Japan, would we have the equipment and technology required to deal with them? Would it be too complex? Could you explain how we could improve this process?
There are a number of things, as I said at the last committee hearing, that Toyota Canada has been leading in and has contributed back to the global Toyota organization, including our early detection and early response activities.
All data on service operations at the dealership level are shared with Toyota Canada. We run computer algorithms to look for anything unusual in service activity that would give us a hint that there might be a technical problem, whether it's a safety-related defect or something else.
But above and beyond that, clearly we've been increasing staff. We have been taking up our role with respect to the task force committees and to ensure that we're a part of this North American regional activity, as well as maintaining our pre-existing relationship with Japan. I think the more you can have technical and engineering staff speaking to each other on a wide range of issues, the faster this information is going to come to the fore.
In addition to that, as we undertook, we have provided to Transport Canada EDR readout tools. There are now four sets of EDR readout tools in the possession of Transport Canada, which we hope will make it easier for the regulator, in this case, to understand the data that's coming out of our cars.
This is, in many respects, as Mr. McDonald has already acknowledged, an iterative approach. There are some things that the regulator will raise with us; there are some things we'll raise with the regulator. But in both cases, we will undertake to act as quickly as humanly possible to deal with any issues that arise.
Of course, Toyota Europe wouldn't have shared the sticky pedal report with Toyota Canada, because, like Toyota Canada, it's a sales and marketing wing of the company in Japan. There's also a manufacturing wing in each of these countries—Canada, U.S., and Europe as well—but it's Toyota Japan that is the nerve centre, if you will, that makes the decisions.
Did they ultimately share that report with Toyota Canada? If so, when?
Okay. I'm not interested in a TI.
Mr. Stephen Beatty: Okay. So--
Mr. Brian Jean: I'm interested in when you had notice of the Europe issue here at Toyota Canada, because remember, Toyota Europe owns 50% of Toyota Canada, do they not? The company that owns Toyota Europe owns 50% of Toyota Canada--
Mr. Stephen Beatty: Toyota--
Mr. Brian Jean: That's a pretty significant investment for them.
Thank you, Mr. Chairman.
We've now insinuated Mr. McDonald into this discussion. I can't help but share the view that has just expressed: that the time lag between the company becoming aware and actually doing something is troubling, to say the very least.
What's even more troubling, Mr. McDonald, is that you recognized there was a problem. In the particular case I indicated earlier on with the Venza, it took Toyota Canada 11 weeks after you had given them an indication of your express concern that they might actually be in violation of the Motor Vehicle Safety Act. You allowed them—I don't know whether you did it, whether the deputy did it, or whether you had instructions from the minister—to wait for 11 weeks while a faulty or defective vehicle was on the road.
Why would you have done that?
When you receive a complaint about a problem or a potential danger, even if it has not been proven, do you act immediately and do you ask the manufacturer whether they have received directly complaints that you did not receive? Do you make that request in order to determine if the problem is serious and widespread?
I noted earlier, in your answer to a question from Mr. Watson, I believe, that you said that Toyota has been as cooperative as other manufacturers. Toyota has an image. It is headquartered in Japan. One might think that the company is far away and that therefore there is no communication. But you say you get as much cooperation from them as from other companies. However, I do not find this answer really reassuring. If your requirements in terms of cooperation are limited, any company can meet them. I would like you to elaborate on this aspect.
Furthermore, do you think it would be reasonable to require that all complaints received directly by the manufacturer be forwarded to you, in order to be able to really meet your responsibility for safety on behalf of the government?
As I indicated, we had no particular instances of sticky accelerator pedals before this particular issue was brought to our attention, so we were not studying that specific problem at that time.
In terms of manufacturers recalling their vehicles as soon as they determine a safety issue, we want it done as quickly as possible. As soon as we determine a safety issue, we want it done as quickly as possible.
As I indicated, there is always a certain amount of give and take. Manufacturers, for the most part, are responding appropriately. If they don't, then we have to take action under the law, and that can sometimes take more time than we would like.
I'm not sure I have any more questions for Toyota Canada. I think it's clear today that Toyota in Japan decides the critical question of what is safety and what is quality for Canadians. I think it's clear that Toyota Japan decides the critical question as to whether to issue a dealer service bulletin or a safety recall--in other words, whether to comply with or flout Canadian law.
Mr. Chair, the Motor Vehicle Safety Act says that notice is to be served when you become “aware” of a defect. It's clear that Toyota Canada, in its relationship with Toyota in Japan, is a bit like a mushroom: it's left in the dark on critical questions like this.
I think it has become clear to me, Mr. Chair, that these guys can't even wipe their noses unless Toyota Japan tells them they should do it, so I'm going to defer any balance of my time to Mr. Jean or anyone else on our side who may have a question for them. I'm not sure I see the point in asking them questions.
Thank you, Mr. Watson.
I lived through part of the time of gas tank explosions in the United States and the situation there, with recalls and some “malmanufacture” of equipment, or at least the incorrect location of gas tanks. You have to excuse me for feeling a little bit excitable about this particular issue, because I don't think brake pedals and their functioning is very different from that. I think it has the possibility of creating a huge situation that could lead to death and, for sure, bodily harm. And I think the civil liability is clear that Toyota is responsible for this, but obviously that's not the question I'm here to answer today.
My question has to do with the timeline. That's really the issue for me. I've had the same issue through all of the meetings we've had, because clearly I don't believe that reasonable notice was followed and that Toyota did respond as they should have.
I asked the question, and you never had the chance to respond, so I'm going to ask it again. Could Toyota Canada have done better, and how?
Thank you to our guests today.
More than anything, I think, whether it's by design or bad luck, it seems like the structure at Toyota is one where less information for your other bodies seems to work best for the corporation. And I think the things we hear about timelines.... I've been in the car business, and I know that when dealers got together they shared information so they could improve what they were doing. It might not be a bad idea for Toyota to take some of that into consideration.
With that, I thank our guests. As has noted, the invitation may be extended again, and we would appreciate your response. Thank you very much.
We're going to take a one-minute break. Then we have some committee business we're going to deal with in the form of a motion by . As our guests are moving away from the table, we'll take a one-minute break and come back and deal with the motion.
Thank you very much, Chairman and colleagues.
As per our discussion on clause-by-clause on Bill , we began to bog down on some detail just prior to the conclusion of the clause-by-clause.
I've proposed this motion: that we continue clause-by-clause consideration of Bill on June 3 from 9 to 11, because I think we're free then, or, if witnesses are confirmed on that date, that a special meeting be called on June 2. You don't need to worry about that, because apparently June 3 has been freed up.
I'm looking for people's agreement on this. I'm hoping the government will agree to continue with clause-by-clause on Thursday.